Low-Powered Transceivers; Children's Walkie-Talkies; Reconsideration of HQ 087021

HQ 950069 November 4, 1991 CLA-2 CO:R:C:M 950069 DWS CATEGORY: Classification TARIFF NO.: 9503.70.80; 8525.20.20 Mr. Ned Marshak Sharretts, Paley, Carter & Blauvelt, P.C. 67 Broad Street New York, NY 10004 RE: Low-Powered Transceivers; Children's Walkie-Talkies; Reconsideration of HQ 087021 Dear Mr. Marshak: As requested by your letter of August 1, 1991, we have reconsidered HQ 087021, dated July 19, 1991, concerning the classification of low-powered transceivers (walkie-talkies) under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). FACTS: The merchandise at issue are low-powered transceivers (walkie-talkies). They operate on a frequency of 49.82 - 48.90 megahertz ("MHz"). They have flexible antennas, a send button, a morse code button, volume control and a plastic belt clip. They are sold in sets of two. Each transceiver requires a 9 volt battery. The housing has blue highlighting, false brackets and false screws, a sticker with the AT&T logo (new models no longer have the AT&T sticker), and is constructed of plastic. The packaging states: "For ages 5 and up." Our research indicates that the transceiver has a retail price of $5.00. Also, it has a range of 92 yards, outdoors, when in line-of-sight. As noted in HQ 087021, the transceiver is "designed primarily for the amusement of children, and are sold in toy stores and major department stores." You agree that these low-powered transceivers are "principally used for the amusement of children and [are] not an article of utility." ISSUE: What is the classification of low-powered transceivers (walkie-talkies), designed for the amusement of children, under the HTSUSA? LAW AND ANALYSIS: Classification of merchandise under the HTSUSA is in accordance with the General Rules of Interpretation (GRI's), taken in order. GRI 1 provides that classification is determined according to the terms of the headings and any relative section or chapter notes. It is your position that the merchandise is classifiable under subheading 8525.20.20, HTSUSA, which provides for: "[t]ransmission apparatus incorporating reception apparatus: [t]ransceivers: [l]ow-powered radiotelephonic transceivers operating on frequencies from 49.82 to 49.90." However, in HQ 087021, the merchandise was classified under subheading 9503.70.80, HTSUSA, which provides for: "[o]ther toys, put up in sets or outfits, and parts and accessories thereof: [o]ther: [o]ther." Section XVI, Note 1(p) provides that: "[t]his section does not cover: Articles of chapter 95." Chapter 85, HTSUSA, is contained within Section XVI. In understanding the HTSUSA, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes, although not dispositive, are to be used to determine the proper interpretation of the HTSUSA. 54 Fed. Reg. 35127, 35128 (August 23, 1989). Explanatory Note 95.03(A) (p. 1588) provides that: Certain toys (e.g., electric irons, sewing machines, musical instruments, etc.) may be capable of a limited "use"; but they are generally distinguishable by their size and limited capacity from real sewing machines, etc. As noted, you agree that the merchandise "is principally used for the amusement of children and is not an article of utility." It has been documented that these transceivers have a very limited range. In addition the merchandise is not made of durable construction (thin plastic, false brackets, false screws). You state that the merchandise is "designed to be used in the identical manner as an adult walkie-talkie." This may be true, but the point is irrelevant. The relevant point, according to the Explanatory Notes, is that the merchandise is of a very limited use. It is designed and principally used as a toy for the amusement of children and not as an article of utility, and therefore it is our position, as stated in HQ 087021, that the merchandise is correctly classifiable under heading 9503, HTSUSA. You contend that previous classification of children's walkie-talkies as low-powered transceivers under the Tariff Schedules of the United States (TSUS) should be our principle guide in classifying the subject merchandise under the HTSUSA. The HTSUSA, effective since January 1, 1989, is a new tariff system and the rules of how it is interpreted and applied are somewhat different from the TSUS. As noted in H. Conf. Rep. No. 576, p. 550, on a case-by-case basis TSUS decisions should be considered instructive in interpreting the HTSUSA, particularly where the nomenclature previously interpreted in those decisions remains unchanged and no dissimilar interpretation is required by the text of the HTSUSA. In this instance, a dissimilar interpretation is indicated by the Explanatory Notes, which state that children's low-powered transceivers are classifiable as toys. Therefore, we do not find previous TSUS decisions instructive in this case. HOLDING: The low-powered transceivers (walkie-talkies) are classifiable under subheading 9503.70.80, HTSUSA, which provides for: "[o]ther toys, put up in sets or outfits, and parts and accessories thereof: [o]ther: [o]ther." HQ 087021 is affirmed in full. Sincerely, John Durant, Director Commercial Rulings Division